Kenyans had more money in their bank accounts in June than any other time in their lifetime despite the ravages of Coronavirus that has caused job cuts, reduced pay and imposed unpaid leave on workers.
According to Central bank of Kenya data, demand deposits which is the money that goes into most current and savings accounts hit Sh1.349 trillion in June, an 11 per cent jump from Sh1.212 trillion in a similar month last year.
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The impact of the coronavirus has been mixed with most employees getting the sack especially in the hotel and tourism sector which has completely slumped.
However, CS Ukur Yatani’s measures to cushion the economy against the impact of the virus has seen money injected directly and indirectly into peoples’ pockets.
Tax cuts that include a cut of 5 percentage points to the corporate income tax rate and exempting those earning less than Sh24,000 from paying taxes while cutting Value Added Tax from 16 per cent to 14 per cent has boosted people’s pockets.
According Ernest&Young, the government’s stimulus package currently stands at Sh225.7 billion in foregone taxes and liquidity injection.
Through Kazi Mtaani alone the National Treasury has injected about Sh10 billion directly into the pockets of young Kenyans with anticipated multiplier effect on the consumption side.
Banks have also stopped auctioning property, suspended principal loan payments or reduced the amount of money repaid each month by stretching loan periods allowing Kenyans to have more money in their accounts.
According to the CBK Monetary Policy Committee statement, banks have restructured loans worth Sh844.4 billion which is a third of the total outstanding loan book of Sh2.9 trillion between March and June this year.
Kenyans have also been saving on reduced commute while working from home, conducting zoom meetings and foregoing expensive catering in city restaurants.
However, the bigger question is whether this boom will change the savings culture among Kenyans who are serial spenders.
A majority of Kenyans barely put anything aside for a rainy day with a savings rate was 6.1 percent of GDP in 2018 down from 6.5 in 2017 and an all-time high of 11.7 percent in December 2007.
Kenyans have recently turned to mobile lenders to finances expensive lifestyles and are virtually on more than one platform for payday loans.
However these loans have also been clamped down by CBK which has kicked the lenders out of Credit Information Sharing mechanism making it difficult for them to know a good borrower and even harder to enforce recovery from defaulters with the threat of listing at Credit Reference Bureaus (CRB).
It remains to be seen whether these unique circumstances will change savings behaviour among Kenyans.